Correlation Between JD and Rosenbauer International

Can any of the company-specific risk be diversified away by investing in both JD and Rosenbauer International at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining JD and Rosenbauer International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between JD Inc and Rosenbauer International AG, you can compare the effects of market volatilities on JD and Rosenbauer International and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in JD with a short position of Rosenbauer International. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD and Rosenbauer International.

Diversification Opportunities for JD and Rosenbauer International

-0.82

Correlation Coefficient

JD  Rosenbauer International

Pay attention - limited upside

The 3 months correlation between JD and Rosenbauer is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding JD Inc and Rosenbauer International AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rosenbauer International and JD is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on JD Inc are associated (or correlated) with Rosenbauer International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rosenbauer International has no effect on the direction of JD i.e., JD and Rosenbauer International go up and down completely randomly.

Pair Corralation between JD and Rosenbauer International

Assuming the 90 days horizon JD Inc is expected to generate 2.78 times more return on investment than Rosenbauer International. However, JD is 2.78 times more volatile than Rosenbauer International AG. It trades about 0.17 of its potential returns per unit of risk. Rosenbauer International AG is currently generating about -0.05 per unit of risk. If you would invest  2,435  in JD Inc on September 17, 2024 and sell it today you would earn a total of  1,105  from holding JD Inc or generate 45.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

JD Inc  vs.  Rosenbauer International AG

JD Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JD Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, JD demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Rosenbauer International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rosenbauer International AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Rosenbauer International is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with JD and Rosenbauer International

The main advantage of trading using opposite JD and Rosenbauer International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD position performs unexpectedly, Rosenbauer International can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Rosenbauer International will offset losses from the drop in Rosenbauer International's long position.

The idea behind JD Inc and Rosenbauer International AG pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.